NEWS Report No. MM 98-3 MASS MEDIA ACTION March 12, 1998
FCC BEGINS INQUIRY INTO BROADCAST OWNERSHIP RULES
PURSUANT TO 1998 BIENNIAL REGULATORY REVIEW REQUIREMENT
(MM DOCKET NO. 98-35)
The FCC today began a formal inquiry to review all of its broadcast ownership rules
as required by the Telecommunications Act of 1996.
Section 202(h) of the 1996 Telecom Act requires the FCC to review the broadcast
ownership rules every two years to "determine whether any of such rules are necessary in the
public interest as the result of competition," and to repeal or modify any rules that are
determined to no longer be in the public interest. The Notice of Inquiry adopted by the
Commission today is its first step in carrying out this statutory mandate for the 1998 biennial
review of its broadcast ownership rules. The Commission said that if in this review it
determined that any of its broadcast ownership rules were no longer in the public interest, it
would subsequently commence an appropriate Notice(s) of Proposed Rule Making to modify
or repeal the rule(s).
The Notice of Inquiry reviews four rules that were not modified by the 1996 Act:
* UHF Television Discount which attributes 50% of television households in a
local television market to the audience reach of a UHF television station for purposes of
calculating whether a television station owner complies with the 35% national audience reach
cap.
* Daily Newspaper/Broadcast Cross-Ownership Rule which prohibits common
ownership of a broadcast station and daily newspaper in the same locale.
* Cable/Television Cross-Ownership Rule which effectively prohibits common
ownership of a broadcast television station and cable system in the same market.
* Experimental Broadcast Station Multiple Ownership Rule which limits the
number of experimental broadcast stations that can be licensed to or controlled by a person.
(over)
- 2 -
The Notice of Inquiry reviews three rules that were recently modified by the FCC in
accordance with provisions of the 1996 Telecom Act:
* National Television Ownership Rule which was revised by the 1996 Act to
eliminate a numerical limit on the number of television stations a party could own nationally
and increase the national "audience reach" cap of television station ownership from 25% to
35% of television households nationally.
* Local Radio Ownership Rules which the 1996 Act revised to allow a party to
own up to 8 commercial radio stations in a market depending on the number of commercial
radio stations in the market.
* Dual Network Rule which, as revised by the 1996 Act, in effect permits an
entity to maintain two or more broadcast networks unless such dual or multiple networks are
composed of (1) two or more of the four major networks (ABC, CBS, Fox, NBC), or (2)
any of the four major networks and one of the two emerging networks (WBTN, UPN).
The Commission noted that this particular Notice of Inquiry was not soliciting
additional comment on broadcast ownership rules already under review in pending
proceedings. The Commission said that those ongoing proceedings satisfy the Biennial
Review requirements of the Telecom Act. These rules include:
* Television Duopoly Rule which states that a party may not own, operate or
control two or more broadcast television stations with overlapping "Grade B" signal
contours.
* "One-to-a-Market" Rule which generally prohibits common ownership of a
television and a radio station in the same market.
The Commission also reviewed and restated its approach to granting conditional
waivers of broadcast ownership rules that are under active consideration by the Commission
in a rulemaking or inquiry proceeding.
Action by the Commission March 12, 1998, by Notice of Inquiry (FCC 98-37).
Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and Tristani, with each
issuing a separate statement.
- FCC -
News Media Contact: David Fiske (202) 418-0513
Mass Media Bureau Contact: Roger Holberg (202) 418-2134, Dan Bring (202) 418-2164
TTY (202) 418-2555
March 12, 1998
PRESS STATEMENT OF FCC CHAIRMAN WILLIAM E. KENNARD
REGARDING LAUNCH OF BIENNIAL REVIEW
OF BROADCAST OWNERSHIP RULES
Today the Commission launched one of the keystone proceedings of the
Biennial Review, the review of the Commission's broadcast ownership rules. In conducting
this review, we will be guided first and foremost by the Biennial Review provisions of the
1996 Act, which require that the Commission review its broadcast ownership rules and
repeal or modify any regulation that it determines is no longer in the public interest.
In assessing the public interest, we must stay focused on the two key aspects
of the public interest: promoting competition and promoting diversity. Not only are both of
these goals rooted in nearly half a century of communications law and policy but these goals
remain relevant because broadcasters still serve as the most important source of news and
information for Americans.
Both competition and diversity are all the more important today because we
recently have experienced the most dramatic increase in consolidation in the broadcast
industry in our history. We need to understand how this consolidation has affected our
competition and diversity goals. We also need to understand the impact of consolidation on
small businesses, including small businesses owned by minorities and women. Broadcast
remains the way that most Americans get vital information about their local community. So
retaining diversity of ownership of broadcast outlets is, in my view, vital to the democratic
process.
The proceeding we launch today will begin a very important dialogue about
the competitive structure of the broadcast industry today. I encourage the broadcast industry
and the public to participate fully in this dialogue in order to inform our decisions regarding
the competitive structure of the industry. I look forward to working with the broadcast
industry, the public, and my colleagues as we, together, take a critical look at our ownership
rules.
- FCC -
March 1 2, 1998
Separat e Statement
of
Commiss ioner Susan Ness
Re: Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications Act of 1996
Today, we launch our first biennial review of the broadcast ownership rules pursuant to the
Telecommunications Act of 1996. Just as it is a good idea to clean out the attic or basement
periodically, I believe the Commission should and will take a hard look at its regulations and
follow the statutory directive to "repeal or modify any regulation it determines to be no
longer necessary in the public interest" (Sec. 202 (h) of the Telecommunications Act).
The Commission has long held the view that the public interest is served by the twin goals of
promoting competition and diversity of voices. I subscribe to that view.
Some argue that media consolidation does not have an adverse effect on diversity. I
disagree. What's needed are independently owned outlets -- not a variety of content
controlled by one owner. In 1945, the Supreme Court counselled that the First Amendment
"rests on the assumption that the widest possible dissemination of information from diverse
and antagonistic sources is essential to the welfare of the public..." (Associated Press v.
United States, 326 U.S. 1, 20 (1945)(emphasis added). The wisdom of the Court's opinion
is as valid today as it was when it was penned in 1945.
"Antagonistic" sources can only be truly antagonistic (in the best sense of the word) if they
are separately owned and genuinely compete in the marketplace of ideas. We should not
confuse "multiple" choices with "independent" choices. For example, we now have
"multiple" sources of news and information offered by NBC -- the national broadcast
network, CNBC, and MSNBC -- which is all to the good. However, by contrast,
"independent" choices are available to viewers by the emergence of competitors to CNN --
MSNBC and Fox News.
As we look at the specific rules under review in this proceeding, I urge commenters to help
us assess the cumulative effect of the sweeping changes in radio and television since the
Congress relaxed the national ownership rules and the local radio ownership rules.
Local Radio Ownership: I note the Commission's finding that control by the top four radio
group owners over total radio advertising dollars in markets across the country has gone
from 80 percent in 1996 to a whopping 90 percent in 1997. In just one year, the other
stations in those markets -- and that could be dozens of stations -- have seen their combined
market share cut in half!
This stark fact must have consequences that need to be spelled out in this proceeding. How
are smaller stations able to compete? How are they able to take a risk on new services or
talent? How are they able to continue providing community and charitable support, which
rarely contributes to the bottom line? Are our ownership rules inadvertently causing the
financial suffocation of small entrepreneurial broadcasters? What is the impact on the
number of minority and female-owned outlets?
Video Programming: I want to explore the relationship between ownership of local stations
and programming. Does structural independence among local stations contribute to a
competitive and diverse marketplace for programming? What impact, if any, does the ever-
increasing web of relationships between program suppliers and station owners have on the
independence of news and information as well as on entertainment programming?
Newspaper-Broadcast Cross-Ownership: Our long standing ban on common ownership of
daily newspapers and local broadcast stations is due for review. As we think about changes
in this rule, we should consider whether we take for granted the importance of critical
reporting between and about newspapers and television/radio. We assume our newspapers
will take a TV or radio station to task on errors, omissions, and editorial points of view --
and generally they do. Likewise, TV and radio stations challenge local newspapers every
day. This healthy antagonism aids viewers and readers as they become informed and then
form their opinions. The critical question we need to ask is whether such a dynamic will
continue to exist if common ownership of these traditional adversaries is permitted.
As our country has changed and our population has become more suburban over the last fifty
years, new questions arise in our diversity analysis. As city populations have migrated to
metropolitan and suburban areas and even "ex-urban" areas, we may need to consider how to
measure diversity within different parts of large markets. Many communities situated in the
shadow of the major metropolitan city are served primarily by the large TV and radio
stations in the major city, along with a community or suburban newspaper. In my
experience, only a handful of these media outlets truly focus on issues of special concern to
these outlying communities. Where proposed combinations involve stations or papers serving
the suburban community, in addition to evaluating diversity choices for the urban population,
we should also focus on the impact of the acquisition on suburban communities.
Conclusion
At the heart of my deep and abiding concern about diversity of ownership of America's
media is my view that such diversity is an "insurance policy for democracy." The free
market of ideas and information is essential to self-governance.
We must not be lulled into a sense of complacency by having more channels, more formats,
and the Internet. Is it in the public interest if the overwhelming number of significant outlets
are owned by a small handful of players? We need to insure that there are enough truly
independent and antagonistic providers of information at each level of content development
and distribution.
- FCC -
March 12, 1998
SEPARATE STATEMENT OF COMM. HAROLD W. FURCHTGOTT-ROTH
In the Matter of 1998 Biennial Regulatory Review: Review of the Commission's
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202
of the Communications Act
I am pleased to support this Notice of Proposed Rulemaking. It puts us on the right
track toward meeting our obligation under section 202(h) to assess the continued necessity of
our ownership rules in light of competitive developments since their adoption and, if they are
indeed unnecessary, to eliminate or modify them.
As an initial matter, I express my agreement with the separate statement of my
colleague Commissioner Powell. Like him, and for the reasons he gives, I believe that a
reevaluation of our traditional regulatory goal of "diversity" is a critical part of this biennial
review. As he observes, this sometimes amorphously-defined goal and the assumptions
upon which it rests must be clearly articulated and supported by facts, not conjecture, in
order to withstand judicial review. Below, I set forth the additional questions that I see as
relevant to our section 202(h) inquiry.
First Amendment As An Affirmative Basis for Ownership Rules
I would like to make clear my belief that the First Amendment is no source of
affirmative authority to regulate mass media ownership, as parts of this item might be
construed to suggest. For the time being, I would simply note that a quick refresher on the
text of the First Amendment should be enough to establish that proposition: "Congress shall
make no law . . . abridging the freedom of speech," U.S. Const., Amdt. 1. Phrased entirely
in the negative, this provision is by its terms a limitation on -- not an expansion of --
governmental power.
Analysis Under Section 202(h)
Although today's item does not spell out what it means to assess whether a regulation
is "necessary in the public interest as the result of competition," as the statute requires, it
seems to me that in analyzing that issue it would be useful for commenting parties to
consider: (i) the original purpose of the particular rule in question; (ii) the means by which
the rule was meant to further that purpose; (iii) the state of competition in the relevant
market at the time the rule was promulgated; (iv) the current state of competition as
compared to that which existed at the time of the rule's adoption; (v) and, finally, how any
changes in competitive market conditions between the time the rule was promulgated and the
present might obviate, remedy, or otherwise eliminate the concerns that originally motivated
the adoption of the rule.
Such considerations are directly related to the language of the statute, which clearly
indicates that Congress wanted the Commission to consider the very real possibility that
competitive forces have eliminated or decreased the need for ownership regulation and that
our rules should keep pace, as near as possible, with the times.
Spectrum Scarcity
The congressional goal embodied in section 202(h) of eliminating anachronistic
regulation, described above, brings me to my next topic. Many, if not most, of the rules
under review in this proceeding are based upon a theory well known to those in the
communications world: the "spectrum scarcity" rationale. I believe the Commission is
obliged to review the factual underpinnings of this fifty-five year-old rationale to see whether
they hold true in today's day and age. I accordingly encourage interested commenters to
address this issue.
The empirical basis of the "spectrum scarcity" argument has been roundly criticized
by some of America's most distinguished jurists and commentators, even by former members
of this Commission. To be sure, the Supreme Court has not overruled its decisions that rely
upon the spectrum scarcity rationale in affirming the constitutionality of FCC regulations,
see, e.g., Red Lion, 395 U.S. 367 (1969); FCC v. League of Women Voters of Cal., 468
U.S. 364 (1984), and of course it goes without saying that it is not the job of this agency to
make constitutional law or to question Supreme Court precedent. But the underlying
premise of those judicial decisions is that, as a factual matter, communications outlets are
sparse. The empirical validity of spectrum scarcity is something quite different than the
constitutional jurisprudence based thereupon.
When it comes to empirical questions relating to an administrative agency's area of
expertise, courts have traditionally deferred to agency judgments on those matters. See
Syracuse Peace Council v. FCC, 867 F.2d 654, 660 (D.C. Cir. 1989). The flip side of that
judicial deference, however, is the agency's continuing responsibility to reexamine its
judgments as time goes by and circumstances change. As the United States Court of Appeals
for the D.C. Circuit has explained: "The Commission's necessarily wide latitude to make
policy based upon predictive judgments deriving from its general expertise implies a
correlative duty to evaluate its policies over time." Bechtel v. FCC, 957 F.2d 873, (D.C.
Cir. 1992) (citation omitted); see also Geller v. FCC, 610 F.2d 973 (D.C. Cir. 1979) ("Even
a statute depending for its validity upon a premise extant at the time of enactment may
become invalid if subsequently that predicate disappears. It can hardly be supposed that the
vitality of conditions forging the vital link between Commission regulations and the public
interest is any less essential to their continuing operation."); National Ass'n of Regulatory
Utility Com'rs v. FCC, 525 F.2d 630, 638 (1975) ("The [Federal Communications]
Commission retains a duty of continual supervision."), cert. denied, 425 U.S. 992.
Not only are we duty-bound to reexamine the facts upon which we have in the past
based our regulatory judgments about broadcasting, but the Supreme Court has clearly
indicated that it might revisit its constitutional jurisprudence in this area if the FCC
"signal[ed] . . . that technological developments have advanced so far that some revision of
the system of broadcast regulation may be required." FCC v. League of Women Voters, 468
U.S. 364, 377 n.11 (1984); see also Telecommunications Research and Action Center, 801
F.2d at 509 n.5 (explaining that, in League of Women Voters, "the [Supreme] Court . . .
suggested that the advent of cable and satellite technologies may soon render the scarcity
doctrine obsolete."). The D.C. Circuit recently ventured to say that the Court's
"suggestion" in League of Women Voters "may impose an implicit obligation on the
Commission to review the spectrum scarcity rationale." Tribune Co. v. FCC, 133 F.3d 61,
68 (1998).
The biennial review required by 202(h) of the Communications Act provides the
perfect opportunity for us to carry out this duty. Indeed, as the Tribune court observed upon
the heels of its comment about our "implicit obligation" to reconsider spectrum scarcity,
Congress in section 202(h) "directed the FCC to review all of its media ownership rules."
Id. at 69. To my mind, the factual validity of spectrum scarcity is a critical element of the
analysis required by 202(h). By its plain terms, that section mandates that we ask whether
changes in competition have obviated the "public interest" need for our regulations. One of
the most fundamental ways in which the broadcast landscape may have changed is that, due
to increased competition, there are significantly more outlets for communication than there
once were.
To be sure, a great deal of our existing regulatory scheme depends upon the validity
of spectrum scarcity. That, however, is no reason not to undertake a thoughtful review of
the matter. If the world around us has changed to such a degree that our past assumptions
no longer make sense, then we must acknowledge that truth. We cannot stick our heads in
the regulatory sands, hoping that no one will notice the eroded foundation of our rules.
March 12, 1998
SEPARATE STATE MENT OF
COMMISSIONER M ICHAEL POWELL
Re: 1998 Biennial Regulatory Review -- Review of the Commission's Broadcast
Ownership Rules and other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, MM Docket No. 98-
In the 1996 Telecommunications Act, Congress directed the FCC to review all of our
ownership rules every two years and repeal or modify any regulation that is "no longer in the
public interest." I support this Notice of Inquiry initiating the review. It is indeed time to
take a sober and realistic look at our broadcast ownership rules in light of the current
competitive communications environment.
Ownership rules have a long history in telecommunications regulation. At various
times, we have justified these rules out of concern over possible competitive harms that
might befall viewers and listeners (monopoly prices and restricted output). More often,
however, many of the rules we propose to re-evaluate today are hinged on considerations we
loosely call diversity.
In mandating that we review these ownership rules every two years, Congress
appeared primarily concerned that we adjust or eliminate these rules if, as is anticipated by
the Telecommunications Act, sufficient robust competition develops. We have a duty to take
a hard look at our ownership rules in light of the current state of competition and to ask and
answer whether in light of significant changes in competitive conditions these rules continue
to have vitality. In this regard, I endorse fully Commissioner Furchtgott-Roth's clearly
enumerated framework for considering these issues, as well as his call to address squarely
the validity of spectrum scarcity rationales for our rules.
In all likelihood, however, the pivotal issues in this proceeding are likely to revolve
around diversity. While competitive concerns are traditionally evaluated using well-
established analytical standards, diversity is a much more visceral matter -- bathed in difficult
subjective judgments and debated in amorphous terms. It has always been difficult to
articulate clearly the government's interest in "diversity," and it has become even more
difficult to do so in light of current judicial precedents. Yet we must do so, if we are to
affirm any of our ownership rules based on such an interest, and we must do so with
adequate rigor and clarity in order for such rules to withstand judicial scrutiny.
What do we need to know in order to complete this difficult task? At various times
there have been a number of distinct expressions of diversity, which serve as a useful
beginning framework for evaluation:
(1) Diversity of ownership: What should this mean? Merely a variety of owners,
regardless of ethnicity or gender? Adequate representation among owners of
minorities and women? If so, how great should that representation be to meet the
public interest standard? Is diversity of ownership a legitimate government interest
standing alone, or only in combination with other objectives, such as diversity of
programming?
(2) Diversity of programming: What is the objective here? A variety of fare?
Programming that is tailored to local communities? Programming that is targeted to
particular minority or gender groups within a community? And, what is the
relationship between ownership and programming, if any?
(3) Diversity of outlets: This can mean many different things as well. Do we wish
to maximize the number of diverse outlet mediums (e.g., T.V., radio, newspapers,
internet, etc.)? Do we wish to promote multiple outlets of the same type, and if so
for what purpose (ownership opportunity, diversity of programming and viewpoint)?
How do we measure the adequate number of outlets under the public interest
standard?
In the end, we will have to evaluate each of these diversity objectives alone and in
combination and consider carefully whether government-imposed prophylactic ownership
restrictions actually serve to advance any or all of these objectives, and if so, whether such
restrictions are narrowly tailored to meet our objectives. We must be capable of explaining
the link between ownership restrictions and our asserted diversity objectives. I urge
commentators to provide comments with sufficient depth and sober analysis to allow us to do
so.
March 12, 1998
SEPARATE STATEMENT OF COMMISSIONER GLORIA TRISTANI
In the Matter of 1998 Biennial Review -- Review of the Commission's
Broadcast Ownership Rules and Other Rules Adopted Pursuant to
Section 202 of the Telecommunications Act of 1996
I welcome the opportunity to initiate this biennial review of our broadcast ownership
rules. In addition to our statutory mandate to conduct such a review, I believe it is healthy
to re-examine our rules periodically to ensure that they are still in the public interest.
The Commission's mandate in this proceeding is to determine whether any of our
broadcast ownership rules are no longer necessary in the public interest as a result of
competition. I write separately to state my belief that our twin interests of competition and
diversity must be analyzed separately and subject to different standards of proof.
Competition focuses on issues of market power. Market power can be constrained by
competition even where there are only a handful of competitors in a market, and even though
such competition does not reach all segments of society. In the cable context, for example,
competition is deemed "effective" (and hence rates are not regulated) if a cable operator
faces at least one competitor that passes 50% of the homes in its service area and 15% of
subscribers take service from such competitor(s). In this context, those residents who may
not have a competitive choice can benefit from those that do.
Diversity, in my mind, is different. Diversity promotes democratic values by
ensuring that people are exposed to a range of views on issues of public concern. Unlike our
interest in competition, I believe that our interest in promoting a diversity of voices and
viewpoints can be satisfied only through a large number of separately-owned competitors in a
market. Similarly, unlike our interest in competition, I do not believe that our interest in
diversity can be satisfied if large segments of society do not have access to such diversity.
When it comes to issues of self-governance, we cannot afford to become a nation of
information haves and have-nots. Thus, I would ask those commenters who believe that our
interest in diversity has been satisfied to adduce evidence not only that diverse sources of
comparable information exist, but also that all segments of society -- rich and poor, urban
and rural, minority and non-minority, apartment dwellers and single family home owners --
have legal and practical access to such diversity and are actually making use of it. For
instance, it could be stipulated that the Internet provides diverse sources of information. But
if a large number of people do not have access to a computer, or if those who have a
computer find that accessing these sources is too cumbersome or too expensive, I would find
it difficult to conclude that the Internet has rendered unnecessary our interest in promoting
broadcasting diversity.
I stress that I have not prejudged the outcome of this inquiry. I thought it
appropriate, however, to apprise commenters of the general standard by which I will
ultimately decide whether our broadcast ownership rules are no longer necessary.
- FCC -